Global Crossing Head Under Scrutiny

NY Times ^ | March 4, 2002

[Bayou City]

March 4, 2002

Global Crossing Head Under Scrutiny

By THE ASSOCIATED PRESS

Filed at 5:33 p.m. ET

LOS ANGELES (AP) -- John D. Rockefeller took 25 years to make his first billion. Gary Winnick needed only 18 months.

Yet nearly five years after he took bold steps to create the world's most advanced fiber optic network, Winnick is at the center of a spectacular implosion of shareholder wealth.

The descent of Global Crossing Ltd. (news/quote), of which Winnick was founder and chairman, was just as precipitous as the ride up. Losing almost $50 billion in market capital, on Jan. 28 it became the fourth-largest Chapter 11 bankruptcy on record.

Winnick, 54, cashed in beforehand, selling $734 million in stock before the company hit bottom.

Claiming they were duped, shareholders have filed more than two dozen lawsuits, claiming among other things that executives inflated financial results. Some people believe Winnick is trying to profit from his company's collapse.

The Securities and Exchange Commission is investigating Global Crossing's accounting practices. The FBI has also launched a probe.

Winnick declined to be interviewed for this article. But the picture of him that emerges from court records, financial documents and interviews is of a man who luxuriated in wealth and who had a propensity for bending the rules.

His company's shareholders are angry.

``If that guy doesn't go to jail, there's no justice,'' said John Burat, a 42-year-old former truck driver in Conshohocken, Pa., who said he poured his full $31,000 Social Security disability payment into Global Crossing stock last year. ``This is my kid's education. It just makes me sick to my stomach.''

Michael Sitrick, Winnick's spokesman, said his client has not broken any laws and that all his stock sales were done in compliance with company rules and federal and state laws.

``Lots of shareholders have made lots of money through Global Crossing,'' he said.

Winnick was an investment banker and had no significant experience in telecommunications in 1997 when he convinced some of the biggest players in the business he could connect the world with a 100,000-mile fiber optic network. He quickly raised more than $700 million and threw in $15 million of his own money to turn his vision into a working company, and Global Crossing went public in 1998.

``He thinks big, always has,'' said Rabbi Marvin Hier, dean and founder of the Simon Wiesenthal Center, who has known Winnick for some 20 years. ``Even when he didn't have money, he didn't want to do the conventional thing.''

Winnick made headlines when he paid about $65 million in cash for a 15-bedroom mansion in Bel-Air in September 2000. And although his company is bankrupt, Winnick is pushing ahead with $15 million of renovations at the estate.

``Mr. Winnick is deeply regretful that the company could not complete a restructuring without filing Chapter 11,'' Sitrick explained about the expenditure. ``He had personal wealth before his involvement and investment in Global Crossing,''

Winnick's enthusiasm for real estate extends to Global Crossing's executive offices in Beverly Hills. His investment firm, Pacific Capital Group, spent $41.5 million in 1998 to buy the historic former MCA building and another $9 million on renovations.

The surroundings are a far cry from Winnick's modest upbringing in Roslyn, N.Y. His father, Arnold, worked in food services and started his own company, which went bankrupt. He died of a heart attack when his son was an 18-year-old student at C.W. Post University.

Winnick graduated with a degree in business and economics and in 1972, joined Burnham and Co. as a trainee broker. He rose to become a top aide to junk bond financier Michael Milken at what became Drexel Burnham Lambert but left to start his own investment firm before Milken and others were indicted on federal racketeering and fraud charges.

In 1999, Winnick was named by the Los Angeles Business Journal as Los Angeles' richest man, worth an estimated $6 billion on paper.

He spread the wealth around. His architect, rabbi and maid all reaped handsome gains.

He also has donated or pledged more than $100 million to favorite causes. The Wiesenthal Center doesn't expect Global Crossing's troubles to interfere with Winnick's $40 million pledge to build a Jerusalem branch with his name on it.

Winnick's fame gained him access to the highest levels of society. During Global Crossing's heyday, Winnick told London's Daily Telegraph that fielding calls from the president of the United States and Buckingham Palace was like ``an out of body experience'' for him.

He loved cutting big deals, but they've brought Global Crossing scrutiny and criticism.

In 1999, his upstart firm paid $8.1 billion in stock for the nation's fifth-largest long distance company, Frontier Corp., of Rochester, N.Y. The following year, Global Crossing sold Frontier's local calling business to Citizens Communications of Stamford, Conn., for $3.7 billion in badly needed cash.

Winnick and his team tried to keep Frontier's $700 million pension plan, but state regulators blocked the attempt.

The rescue plan that Global Crossing presented when it announced it was seeking bankruptcy protection has also raised questions. Under the deal, two companies, Hutchison Whampoa (news/quote) of Hong Kong and Singapore Technologies Telemedia, would invest $750 million for a 79 percent stake in Global Crossing.

Global Crossing's creditors would get 21 percent, shareholders nothing.

Winnick never revealed to his own board or creditors that he and fellow company director Steven Green invested $25 million in a company called K1 Ventures, effectively controlled by another firm, Temasek Holdings, which in turn owns Singapore Technologies.

Winnick and Green told The New York Times (news/quote) their investment was unrelated to Singapore Technologies' effort to buy Global Crossing. Winnick resigned from K1 Ventures' board after the disclosure.

Creditors and shareholders are also angry that Winnick made millions even though Global Crossing never reported an annual profit.

The company faltered after supply for network capacity quickly outpaced demand -- competitors tried to copy the firm's early success and the telecom industry deflated in the recession. Still, Winnick and his top executives pressured employees handling the books to meet Wall Street expectations so the stock price would remain high, according to employee claims.

Winnick and executives propped up Global Crossing's stock price by engaging in ``a series of misleading transactions,'' Roy Olofson, a former vice president of finance, alleged in a defamation lawsuit filed Feb. 27 against Winnick and three other executives.

In one instance, the company reported $150 million in cash revenue after swapping fiber capacity with 360 Networks, a Canadian-based telecom. No cash was ever received, Olofson said.

Last year, Global Crossing executives opted not to warn investors about pending problems after a difficult first quarter, Olofson said.

Global Crossing has repeatedly denied Olofson's claims, labeling him a disgruntled former employee who sought payment from the firm

to stay quiet.

^------

On the Net:

www.globalcrossing.com

[Bayou City]

Steven Green, former ambassador to Singapore, is becoming more interesting in this saga.

Winnick never revealed to his own board or creditors that he and fellow company director Steven Green invested $25 million in a company called K1 Ventures, effectively controlled by another firm, Temasek Holdings, which in turn owns Singapore Technologies.

Winnick and Green told The New York Times (news/quote) their investment was unrelated to Singapore Technologies' effort to buy Global Crossing. Winnick resigned from K1 Ventures' board after the disclosure.

[TwoStep]

**Bump**

[Bayou City]

Following is corporate filing from the Florida Sec. of State web site. Pay attention to the name of the corporation ,GREENSTREET/TERREMARK MANAGEMENT, directors STEVEN J GREEN and JEFFREY A SAFCHIK.

This is going to get confusing.

Florida Secretary of State LINK HERE

HTML> Division of Corporations

---

Florida Profit
GREENSTREET/TERREMARK MANAGEMENT, INC.

---

PRINCIPAL ADDRESS 701 BRICKELL AVE., STE. 2420 MIAMI FL 33131

---

MAILING ADDRESS 701 BRICKELL AVE., STE. 2420 MIAMI FL 33131

Document Number P97000028356	FEI Number 650744922	Date Filed 03/28/1997
State FL	Status INACTIVE	Effective Date NONE
Last Event ADMIN DISSOLUTION FOR ANNUAL REPORT	Event Date Filed 09/24/1999	Event Effective Date NONE

---

Registered Agent

Name & Address

SHORE, H. ALLAN
1221 BRICKELL AVE., STE. 2100
MIAMI FL 33131

Officer/Director Detail
Name & Address	Title
GREEN, STEVEN J 701 BRICKELL AVE., STE. 2420 MIAMI FL 33131	D
SAFCHIK, JEFFREY A 701 BRICKELL AVE., STE. 2420 MIAMI FL 33131	D

Annual Reports
Report Year	Filed Date	Intangible Tax
1998	01/20/1998

---

View Events No Name History Information

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View Document Image(s)

[terilyn]

I said it before...if this thing were a Republican scandal vs a dem one the media would be all GX all day. CNBC is still trying to pull something out to nail GWB on Enron. Winnick is going to wind up making Kenny Boy look like a victim by comparison.

I don't think I've ever said it, but I'm in the investment business. We have clients that own this piece of crud stock. No, we didn't recommend it, but lots of people wanted a piece of it and refused to believe it would die even after all the signs were there. Sad!

[copycat]

bttt

[Bayou City]

Following is an excerpt... From The South Florida Business Journel

LINK HERE

Industry Wrapups
From the April 25, 1997 print edition
Real Estate

More cash chasing deals
You can add another pile of cash to the capital chasing South Florida real estate deals. Greenstreet Partners, a Miami hedge fund, this week launched Greenstreet Florida Opportunity Fund with plans to invest $100 million in deals of less than $10 million.
Greenstreet CFO Jeffrey Safchik said such deals are "under the radar screen" of large investors. Another Greenstreet fund headed by developer Manny Medina, Greenstreet/Terremark, loaned $3 million to Medina for his $54 million Fortune House, a 296-unit, 29-story condo on Brickell Avenue. Safchik said he plans to focus more on joint ventures than on typical loans.
"I don't see us being just a lender, where the only upside to us is interest," Safchik said.

[Righty1]

This seems to be a particularly Florida Corp tactic of selling the same Co. twice i.e. once to the public and after trashing the stock to zero again to a private group which happens to include the Corp bigwigs. I am dealing with a Co doing that right now SYFS.OB and its' CEO William Wheeler who has been quoted as saying "I don't care what the share price is" after driving it to near zero by not reporting and other slick manipulations.

[Tumbleweed_Connection]

I just read some bad things about TX conservatives concerning Enron but haven't taken the time to post it. Even so, nothing I have seen comes close to Clinton's role in either, knowing as little as I do, nor the Rats role in Global Crossing (MacRat as well).

[lds23]

John Legere of Global Crossings was President of AT&T-Asia in the early 90's. Legere went off to form Global Crossings. Armstrong (AT&T's current CEO) was active in wanting to get a foothold in China by transferring satellite technology to China while he was CEO of Hughes Corp around the same time (during the Clinton administration). Hutchinson Wampoa now wants to buy Global Crossings.

I don't know what it is about me that seemingly unrelated facts can lead me to idle speculation...

[Bayou City]

This is according to documents Terremark filed with the SEC.

SEC

FORMER COMPANY:
FORMER CONFORMED NAME: AMTEC INC
DATE OF NAME CHANGE: 19970715

FORMER COMPANY:
FORMER CONFORMED NAME: AVIC GROUP INTERNATIONAL INC/
DATE OF NAME CHANGE: 19950323

FORMER COMPANY:
FORMER CONFORMED NAME: YAAK RIVER MINES LTD
DATE OF NAME CHANGE: 19931001

From page four...

PROSPECTUS SUMMARY

We are a company that provides value-added telecommunications services to and from the Far East and has telecommunictions investments in the People's Republic of China. We initially focused our business on China because of China's large and rapidly growing need for telecommunications services and its requirement for foreign capital and technology to meet that need. More recently, we have formed a joint venture with Fusion Telecommunications International to provide telecom services, both voice and data, to and from Asia. We have also invested in IXS.NET, Inc. to provide fax services over the Internet, prepaid credit cards and other Internet Protocol based services. Our joint venture operations in six cellular networks in Hebei Province in Northeast China have been terminated. We continue to have a joint venture with the Electronics Industry Department of Hebei Province and are repositioning that joint venture with a view to providing Internet Protocol fax, voice and other services which can be transmitted over digital telephone lines or the Internet.

We recently completed a merger with Terremark Holdings, Inc., a company engaged in the development, construction, sale, leasing, management and financing of various real estate projects since 1982. Pursuant to this merger, we changed our name from Amtec, Inc. to Terremark Worldwide, Inc. Terremark has provided services to private and institutional investors, as well as for its own account. The real estate projects with which Terremark has been involved have included retail, high rise office complexes, mixed use projects, condominiums, condominium hotels and governmental assisted housing. Terremark has also been involved in a number of ancillary businesses which complement its core development operation including brokering of financial services, property management, construction management, condominium hotel management, residential sales and commercial leasing and brokerage and advisory services. As part of the merger, we issued 78,539,830 shares of our common stock to Terremark shareholders.

[Beowulf]

The rescue plan that Global Crossing presented when it announced it was seeking bankruptcy protection has also raised questions. Under the deal, two companies, Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia, would invest $750 million for a 79 percent stake in Global Crossing.

Hutchison Whampoa, Ltd., out of Hong Kong is the same front that the Chi Coms are using for managing the Panama Canal (thank you very much Jimmy Carter). It is directed by the army of the People's Republic of China.

That the army of the PRC wants to take over the future fiber-optic cable bandwidth connection between the US and Asia, and between the US and Europe does not bode well for America as the 21st century unfolds. (Thank you ever so much Terry McAuliffe.)

[Bayou City]

Stay tuned it gets better...

[Bayou City]

I think you are right on that, each one of these companies were created through reverse mergers.

[Bayou City]

Following are excerpts from documents AVIC Group International filed to the SEC on 7/16/1996.

Link Here

HISTORY OF THE COMPANY

AVIC Group International, Inc. (the "Company") was incorporated under the laws of the State of Colorado on May 10, 1982 under the name "Yaak River Mines, Ltd." From inception through January, 1992, the Company was engaged in certain business operations which are not associated with the Company's current business operations. From approximately January, 1992 through September, 1994, the Company was operationally dormant.

As of September 2, 1994, the Company entered into an Agreement and Plan of Reorganization, as amended by an agreement dated as of December 28, 1994 (the "Reorganization Agreement") with ITV Communications, Inc., a California corporation ("ITV"), in connection with which the Company acquired ITV as a wholly-owned subsidiary in exchange for a number of shares of the Company's common stock, par value $0.001 per share ("Common Stock") and options to purchase shares of Common Stock equal to approximately 91% of the number of the issued and outstanding shares of the Company's Common Stock on a fully diluted basis after the completion of the transaction. On February 8, 1995, the Company and ITV completed the transactions contemplated by the Reorganization Agreement, and the Company changed its name to "AVIC Group International, Inc." See "Business - Reorganization Agreement with ITV."

BUSINESS OF THE COMPANY

The Company is a development stage company which is engaged principally in the business of establishing joint ventures ("Sino-foreign joint ventures") with entities situated in the People's Republic of China ("PRC") in the telecommunications industry in the PRC. The Company intends to establish these Sino-foreign joint ventures to develop telecommunications networks in the PRC in cooperation with authorized telecommunications network operators in the PRC. In connection with this business plan, the Company has entered into certain agreements with entities, which are affiliates of Tweedia International Ltd. ("Tweedia"), the Company's principal stockholder. These agreements contemplate the Company's participation in distributions from the authorized operations of Sino-foreign joint ventures for the purpose of building telecommunications networks, transferring ownership of the networks to authorized telecommunications network operators in the PRC, and servicing and maintaining such telecommunications networks ("BTSM").

[Bayou City]

FYI the SEC filings are listed HERE

[JohnHuang2]

Thanks for the ping, my friend.

[Dick Bachert]

GLOBAL DOUBLECROSSING BUMP!

[Trajan88]

Gary Winnick and all those that sank Global Crossing are d-bags.

Trajan88 TAMU Class of '88

[Bayou City]

Where's your Terry post?

[Bayou City]

Remember from above post the K1 Ventures with Winnick and Green, also Jeffrey Safchik from the Florida Sec. State filing. I came across this from the Singapore Exchange web site.

Singapore Exchange

Form 902 MASNET No. 80 OF 24.09.2001
Announcement No. 83


K1 VENTURES LIMITED

Announcement Of Appointment Of Chief Operating Officer

Date of appointment:	11/09/2001
Name:	Jeffrey Safchik
Age:	50
Country of principal residence:	USA
Whether appointment is executive, and if so, the area of responsibility:	Chief Operating Officer
Working experience and occupation(s) during the past 10 years:	Managing Director/CFO Greenstreet Partners

Other directorships
Past (for the last five years)

None

Present

None